Archive | The New Depression

The great extinction of working class whites

Supporters hold signs as Republican US presidential candidate Donald Trump speaks at a campaign rally in Norcross, Georgia, USA, 10 October 2015. The visit, attended by thousands, is Trump's first rally in metro Atlanta since he joined the race. (EPA/ERIK S. LESSER)

Supporters hold signs as Republican US presidential candidate Donald Trump speaks at a campaign rally in Norcross, Georgia, USA, 10 October 2015. The visit, attended by thousands, is Trump’s first rally in metro Atlanta since he joined the race. (EPA/ERIK S. LESSER)

Barbara Ehrenreich looks at the dying off of the white working class. As always, I urge you to click the link and read it all:

All of this means that the maintenance of white privilege, especially among the least privileged whites, has become more difficult and so, for some, more urgent than ever. Poor whites always had the comfort of knowing that someone was worse off and more despised than they were; racial subjugation was the ground under their feet, the rock they stood upon, even when their own situation was deteriorating.

If the government, especially at the federal level, is no longer as reliable an enforcer of white privilege, then it’s grassroots initiatives by individuals and small groups that are helping to fill the gap — perpetrating the micro-aggressions that roil college campuses, the racial slurs yelled from pickup trucks, or, at a deadly extreme, the shooting up of a black church renowned for its efforts in the Civil Rights era. Dylann Roof, the Charleston killer who did just that, was a jobless high school dropout and reportedly a heavy user of alcohol and opiates. Even without a death sentence hanging over him, Roof was surely headed toward an early demise.

Acts of racial aggression may provide their white perpetrators with a fleeting sense of triumph, but they also take a special kind of effort. It takes effort, for instance, to target a black runner and swerve over to insult her from your truck; it takes such effort — and a strong stomach — to paint a racial slur in excrement on a dormitory bathroom wall. College students may do such things in part out of a sense of economic vulnerability, the knowledge that as soon as school is over their college-debt payments will come due. No matter the effort expended, however, it is especially hard to maintain a feeling of racial superiority while struggling to hold onto one’s own place near the bottom of an undependable economy.

While there is no medical evidence that racism is toxic to those who express it — after all, generations of wealthy slave owners survived quite nicely — the combination of downward mobility and racial resentment may be a potent invitation to the kind of despair that leads to suicide in one form or another, whether by gunshots or drugs. You can’t break a glass ceiling if you’re standing on ice.

It’s easy for the liberal intelligentsia to feel righteous in their disgust for lower-class white racism, but the college-educated elite that produces the intelligentsia is in trouble, too, with diminishing prospects and an ever-slipperier slope for the young. Whole professions have fallen on hard times, from college teaching to journalism and the law. One of the worst mistakes this relative elite could make is to try to pump up its own pride by hating on those — of any color or ethnicity — who are falling even faster.

Bush’s fault

Time 150803

So things really were better during the Clinton administration , and it really was George Bush who broke the economy for working people:

It is a study that might help us understand the rise of Donald Trump as a populist blue collar hero and, at the other extreme, the left-leaning Vermont senator Bernie Sanders in the upcoming presidential primaries. Not because ordinary workers found themselves stuck in a rut for 30 years when all around them enjoyed the party of the century.

The new data shows that many of them had much higher incomes to splash on homes and cars. Instead the anger comes from their gains being wiped out from the 2001 recession onwards. And the only response of George W Bush’s team and the Federal Reserve was to protect the rich with tax cuts and cheer workers with ultra low interest rates that, as we know, underpinned the sub-prime mortgage scandal.

Both Trump and Sanders appeal to people who blame the slide in their living standards over the last decade, at least in part, on a political elite that failed to understand their concerns.

Until recently, an examination of the labour market relied on the annual publication of average wages. That is how the story of flat wages for the many and super-returns for the few over such a long period has emerged. Each calculation of average wages is a snapshot of all the people in the workforce. Unfortunately, millions of people quit the labour market during the year and others join. It is not the same cohort, and not just at the outer margins.

Robert J Shapiro, a former economic adviser to Bill Clinton who now runs the Sonecon consultancy in Washington, grabbed the opportunity to look at the raw census data when the US statistical office published it a few years ago.

He tracked the median incomes of average households as they travelled through the decades, checking on the progress of men versus women, Hispanic people versus black and white people, college graduates and different age groups. The report presents us with a more nuanced picture of the workforce and how it has fared.

He found that the 1980s boom, which gained traction in the middle of the decade, boosted the wages of all but the oldest group of workers. So large, steady income gains characterised the average household whether they were headed by men or women, or by people with high school diplomas or college degrees, whatever their ethnicity.

As Shapiro said: “This evidence contradicts the narrative told by those who track the value of aggregate income from the 1970s to present the claim that most Americans have made little progress for decades.”

The momentum dissipated in the first Bush presidency between 1989 and 1993 and accelerated again in the Clinton years before running out of steam in the early 2000s

Then came the downturn. The second Bush era, under George W, was painful for almost all but twentysomething college graduates, who even survived the 2008 crash with barely a scratch, and was worst for those without a high school diploma. Shapiro says the least educated saw their incomes “devastated” after 2001.

“Across the three younger age-cohorts, the median income of households headed by people without high school diplomas fell an average of 1.9% per year as they aged through the 2002-2007 expansion; and over the entire period from 2002 to 2013, their median incomes fell by an average of 1.8% year as they aged,” the report says.

Between 2010 and 2013, households where the main earner had been aged 25 to 29 back in 1982 suffered even more if they quit education before going to high school. They lost 7.1% in income in each year as vast numbers either took a cut in pay, in hours or were made unemployed.

The rise and fall of the average workers’ wages documented in the report chimes with the business cycle and the trend in Europe, which followed a similar trajectory.

Here we go again

Best Disability insurance

First of all, George Mason is a wingnut school whose economic programs are funded by the usual suspects. The other point (one which Michael Hiltzik hints at but doesn’t address directly) is that the Social Security disability system is not meant to deny eligible claims simply to fit the budgetary wishes of Congress. Either you’re eligible, or you’re not. And playing with the definitions to bring down the approval rate (as Republican push us to do) is the worst kind of moral sophistry. Why aren’t liberals fighting back on moral grounds?

At first glance, an op-ed in Monday’s Wall Street Journal makes a devastating case against Social Security’s disability system. On closer inspection, the case isn’t so clear.

“A system designed to serve society’s vulnerable has morphed into a benefit bonanza that costs taxpayers billions of dollars more than it should,” write the authors, Mark J. Warshawsky, a visiting scholar at the Mercatus Center of Virginia’s George Mason University and former member of the Social Security Advisory Board, and Ross A. Marchand, a George Mason grad student.

Their focus is on appeals granted by the program’s administrative law judges, who have the power to reverse denials of disability benefits. Their chief concern is that too many judges are approving too many appeals.

“In 2008 judges on average approved about 70% of claims before them, according to the Social Security Administration,” they write. “Nine percent of judges approved more than 90% of benefit requests that landed on their desks.” If all the judges who approved 90% or more of appeals before them were removed, they calculate, the taxpayers would be relieved of paying 98,000 disability cases costing an average $250,000 each. The authors say that’s a savings of $23 billion. (The math actually works out to $24.5 billion.)

Followers of disability politics will see this op-ed as the latest in a lengthening stream of attacks on Social Security disability, which is facing a near-term funding crisis that Congress is loath to address. Warshawsky and Marchand mention the disability program’s looming fiscal shortfall, which could force cuts in disability payments of about 20% as early as 2016. “Congress would be wise to begin much needed reform,” they say, and they suggest starting with these overgenerous judges.

So it’s proper to give their data and conclusions a close look. Warshawsky declined to answer my questions about the piece on the record, but referred me to a lengthier treatment he published in Bloomberg’s Pension & Benefits Daily in 2012.

First question: Why did Warshawsky and Marchand use case figures from 2008? It can’t be because those are the latest figures available–decision data for individual judges is available at least through the end of 2014. Social Security’s own inspector general’s office compiled the data through fiscal 2013 for a report issued last July. What the office found is that the average approval rate has been coming down for years–reaching 56% in fiscal 2013.

Warshawsky and Marchand even allude to this trend in their piece; they observe that reforms implemented by former Social Security Commissioner Michael Astrue have reduced the number of cases heard by supposedly overly generous judges. Their concerns about whether the trend will continue are entirely conjectural: “These changes can easily be undone, either intentionally by future administrators, or unintentionally as bad habits slip back into the system.” So far, that hasn’t happened, and there’s no evidence that it’s likely to.

Oh look


Larry Summers has had an epiphany!

Last month, Larry Summers ripped into those arguing that more education is the answer to the country’s rampant inequality.

“The core problem is that there aren’t enough jobs,” said the former Treasury Secretary under Bill Clinton and top economics adviser to Barack Obama. “If you help some people, you could help them get the jobs, but then someone else won’t get the jobs. Unless you’re doing things that have things that are affecting the demand for jobs, you’re helping people win a race to get a finite number of jobs.”

He made these comments at a conference at the Brookings Institution put on by the Hamilton Project, the economics think tank funded by Summers’ predecessor at the Clinton Treasury, Robert Rubin.

If the significance of these comments is not clear, the most important economic figure of the Democratic Party mainstream was demolishing one of the party’s central themes over the last two decades. Summers was arguing that the problems of the labor force — weak employment opportunities, stagnant wages and rising inequality — were not going to be addressed by increasing the education and skills of the workforce. Rather, the problem was the overall state of the economy.

The standard education story puts the blame for stagnant wages on workers. The key to getting ahead is education. On the contrary, Summers argued at Brookings: The blame for the economic malaise goes to the people who design economic policy. It is their fault that workers aren’t able to secure decent-paying jobs.

Summers was responding to evidence that can’t be reconciled with the education story. As my friends and colleagues Larry Mishel, John Schmitt and Heidi Shierholz have shown, inequality has continued to grow since 2000 even though demand for workers in highly skilled occupations has not increased. Similarly, there has been little change in the wage premium that college-educated workers enjoy relative to less-educated workers, as pay for the typical college grad has barely risen since the turn of the century.
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Unemployment changes you

Food Kitchen

I’ve seen this so clearly, both in myself and my friends:

Long periods of unemployment drain our bank accounts and weaken the economy. New research suggests extended joblessness could also dampen our personalities. And that can make it harder to find more work.

A study published this month in the Journal of Applied Psychologyexamined a sample of 6,769 German adults — 3,733 men and 3,036 women — who took the same personality test twice in a four-year window. During the experiment, 251 subjects were unemployed for less than a year; 210 faced joblessness for one to four years.

The authors focused on five traits: conscientiousness, neuroticism, agreeableness, extraversion and openness. Dispositions of perpetually job-hunting people transformed considerably — and dismally — compared with their steadily working counterparts.

“Unemployment,” researchers wrote, “has one of the strongest impacts on well-being … often lasting beyond the period of unemployment and being comparable with that of becoming disabled.”

The findings in Germany have domestic implications. One characteristic of America’s slow economic recovery is the extraordinary number of people who have fallen into the ranks of the long-term unemployed, those unable to find jobs for 27 weeks or more. An estimated 3.4 million fit this description, by the Economic Policy Institute’s measure.
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Kicking ass for the working class

Doug McMillon at Walmart Shareholders’ Meeting 2012

Remember, this movement started with no help (let alone leadership) from the political establishment on the minimum wage organizing, and this certainly wasn’t driven by electoral politics. This was accomplished by the workers themselves and some good old-fashioned organizing, and those organizers who helped pulled it off should be congratulated:

BENTONVILLE, Ark. — Wal-Mart Stores Inc. is spending $1 billion to make changes to how it pays and trains U.S. hourly workers as the embattled retailer tries to reshape the image that its stores offer dead-end jobs.

As part of its biggest investment in worker training and pay ever, WalMart told The Associated Press that within the next six months it will give raises to about 500,000 workers, or nearly 40 percent of its 1.3 million U.S. employees. Wal-Mart follows other retailers that have boosted hourly pay recently, but because it’s the nation’s largest private employer, the impact of its move will be more closely watched.

In addition to raises, Wal-Mart said it plans to make changes to how workers are scheduled and add training programs for sales staff so that employees can more easily map out their future at the company.

“We are trying to create a meritocracy where you can start somewhere and end up just as high as your hard work and your capacity will enable you to go,” CEO Doug McMillon told the AP during an interview this week at the company’s headquarters in Bentonville, Arkansas.

The changes, which Wal-Mart announced Thursday as it reported stronger-than-expected fourth quarter results, come at a time when there’s growing concern for the plight of the nation’s hourly workers.

Thousands of U.S. hourly workers and their supporters have staged protests across the country in the past couple of years to call attention to their financial struggles. Business groups and politicians have jumped into the fradebating a proposal by President Obama to raise the federal minimum wage from $7.25 to $10.10 an hour. And a new Associated Press-GfK poll found that most Americans support increasing the minimum wage.

At the same time, competition for retail workers is becoming increasingly stiff. As shoppers get more mobile savvy, retailers are seeking sales staff that’s more skilled at customer service. But in the improving economy, the most desirable retail workers feel more confident in hopping from job to job.

I like Gawker’s take:

Walmart is giving raises to its workers for one simple reason: it has to. The company is smart enough to see that the ongoing protest campaign against it by its own poor employees demanding a living wage will not end. It will not end, just like the similar campaign by fast food workers will not end. Not only will the cries of low-paid workers not end; they will be heard. Walmart knows that these demands must, eventually, be met. Because they are eminently reasonable. And more to the point, because America is a nation that is starting to realize in a very public way the the economic inequality that has been choking us for three decades now is unsustainable. The Walmart corporation and its well-paid executives and fabulously wealthy owners understand this simple truth: there are many, many more people who identify with Walmart workers than there are people who identify with the richest family in America.

Walmart is giving its workers raises. It is doing so because it doesn’t have a choice. This is a good example of rising public anger accomplishing something. Just a couple of dollars an hour, for now. More, soon.

Are any of you surprised?

Man Takes A Dive, Jumps Off Third Mainland Bridge and Drowns

I didn’t think so. H/T Ron K.:

Around 45,000 suicides each year are attributable to unemployment, according to a survey of 63 countries published in The Lancet Psychiatry on Wednesday.

Health watchdogs should regard unemployment as a continuous suicide risk, and not just at times of economic crisis, its authors said.

University of Zurich researchers in Switzerland pored over mortality data from 63 economies between 2000 and 2011.

The period spanned prosperity and stability as well as the global financial blowup and its aftermath.

During this period, around 233,000 suicides were recorded each year, of which about 45,000 could be attributed to unemployment.
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It takes a village of ‘experts’ to craft Hillary’s spiel

Swamp Rabbit explains Hillary's quandary regarding income inequality

Swamp Rabbit ponders Hillary’s income inequality quandary

The headline — “Economic plan is a quandary for Clinton ’16” — was provocative. The lede was downright bizarre:

With advice from more than 200 policy experts, Hillary Rodham Clinton is trying to answer what has emerged as a central question of her early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy.

“She’s betwixt a rock and a hard place,” Swamp Rabbit said. “Ain’t gonna be easy to solve that there quandary.”

“The poor are being cheated because of laws that are too favorable to the wealthy,” I said. “At this point, the wealthy should understand this. It doesn’t take 200 experts to state the obvious.”

I wondered why I felt so worked up about Hillary’s campaign strategy. Then I remembered I’m one of the poors, living in a shack in the Tinicum swamp with an alcoholic rabbit. It galls me that she is trying to successfully mimic Elizabeth Warren’s call to correct income inequality, but without endorsing any of Warren’s remedies for the problem.

“She’s just another Democrat trying to win without changing the status quo,” I said. “She’d rather alienate millions of poors than risk alienating her hard core of wealthy campaign contributors.”

The rabbit shoved some twigs in the wood stove and looked at me funny. “What’s so odd about that, Odd Man? If wealthy people quit givin’ her money, how’s she gonna afford all them experts that tell her how not to piss off the wealthy?”

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